The Investment Trap Nobody is Talking About

BY BILL GRIFFO

November 24, 2025

Why the Fed Can Print Money… But Not Electricity**

Hey Income Hunters,

We’ve talked a lot in recent months about how liquidity injections keep rescuing the market — from Sep ’19 repo chaos, to COVID, to the 2022 gilt crisis, to the hedge-fund basis-trade unwinds this year.

But today’s story has a twist, Wall Street still isn’t pricing in…

The Fed and Treasury can print liquidity, but they cannot print electricity.
They can expand bank balance sheets, but they cannot expand the power grid.
They can stabilize repo markets for a day, but they cannot stabilize energy shortages for a decade.

And that disconnect — between unlimited dollar liquidity and hard physical limits on energy and grid capacity — is setting investors up for significant danger. :

The Fed’s Emergency Meeting: A Big Tell

This past week, the New York Fed quietly convened Wall Street’s primary dealers to talk about stress building in the repo market — the financial plumbing that keeps the U.S. Treasury market functioning.

Yes — the Fed actually confirmed the meeting. This wasn’t a “Hey guys, how’s everything going?” chat.

This was:
“Use the Standing Repo Facility (SRF). Please. We need you to. No stigma. No judgment.”

Why?
Because the Treasury has spent 30 straight months shifting issuance into T-Bills, creating a $550B/week rolling T-Bill maturity wall.
This is what that means for you:

The Treasury must keep a huge Treasury General Account (TGA) balance
This drains money market savings and pushes repo rates up
When repo rates rise unexpectedly, levered investments crash
This forces investors to dump long-term Treasury bonds
When long-term Treasuries get dumped, the entire global financial system wobbles

We’ve seen this movie before:

This is why the Fed begged dealers to use the SRF — even as Bloomberg reported that dealers are refusing because of the stigma of borrowing from the Fed and their balance-sheet constraints.

The Real Problem: Liquidity ≠ Energy

Here’s where the plot thickens.

Even if the Fed stabilizes repo markets… even if the Treasury manages the TGA… even if regulations are eased…

None of that produces a single additional watt of electricity.

And AI demand is exploding.

Utility build-outs are years behind AI build-outs.
The U.S. grid is aging, blocked by regulation, and short on capacity.

You can inject dollars instantly.

But you cannot inject energy instantly.

Which means every new wave of liquidity — whether to rescue money markets, Treasury auctions, or hedge-fund positioning — will eventually flow into:

Higher AI-related demand – Higher commodity prices – Higher electricity prices – Higher Inflation

Exactly like 2020–2022.

And just like that, policymakers get trapped in the loop:

Liquidity → Inflation → Higher Rates → Market Dysfunction → Liquidity → Inflation.

This is NOT a dial.

This is a switch — as we discussed in our August issue on the coming Fed reshuffle .
The settings are:

Deflationary Crisis
Nuclear-Level Liquidity by the Fed to fuel increased industrial growth

There is no middle position.

The Three-Headed Monster Raising “Real Capital Costs”

U.S. Government needs trillions annually
AI build-out requires trillions
Global oil & gas capex needs $500B+ per year

Together, they push real capital costs higher — meaning any liquidity injection that isn’t nuclear-level printing is actually tightening.

This is why even “good news” liquidity may not lift markets the way it used to.

The firehose isn’t strong enough anymore.

Portfolio Strategy: What Long-Term Investors Should Do

Time to shift from “chasing rallies” to “owning what survives the loop.”

1. Overweight Hard Assets

Gold, Silver, Copper

These are the only assets that win in both scenarios:

Deflationary crisis (hard assets hold relative value)
Liquidity nukes (hard assets inflate)

2. Underweight Long-Term Bonds

Powell may cut, but cuts don’t matter if inflation re-accelerates because energy bottlenecks collide with liquidity injections.

This has been our message and the risk/reward is still terrible for long-duration Treasuries .

3. Favor Short Duration & Cash Equivalents

T-Bills and short-duration ETFs remain your dry powder.

4. Energy Infrastructure, and Power Producers

Like GRID and VOLT ETFs that hold companies that support the massive energy infrastructure build needed to produce the energy needed.

5. Keep Equity Hedges On

A liquidity disappointment at year-end could hit risk assets hard before the “nuclear liquidity” switch gets flipped.

Bottom Line

This is the first time in U.S. history the Fed faces a problem it cannot print its way out of:

Energy. Grid capacity. Physical constraints.

Every liquidity injection pushes us closer to another inflation spike.
Every inflation spike forces higher rates.
Higher rates break the Treasury market.
A broken Treasury market forces — you guessed it — bigger liquidity injections.

The loop is tightening.

Until the Fed flips the switch to “massive liquidity/Yield curve control,” the safest places remain: